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The Pentagon yesterday approved Northrop Grumman's bid to buy Newport News Shipbuilding, rejecting a competing bid from Falls Church defense contractor General Dynamics. The Justice Department, meanwhile, filed suit to block General Dynamics' bid to buy the Virginia shipbuilder, saying that deal would create a monopoly of nuclear shipbuilders.The two announcements effectively kill the General Dynamics bid, although Newport News' board had approved both deals.Newport News, the nation's sole producer of aircraft carriers for the U.S. Navy, and General Dynamics are the only two U.S. companies that make nuclear ships and submarines."This merger would give General Dynamics a permanent monopoly in nuclear submarines and would substantially lessen competition in surface combatants," said Charles A. James, assistant attorney general in the Justice Department's Antitrust Division. "Our armed forces need the most innovative and highest-quality products to protect our country. This merger to monopoly would reduce innovations and the quality of the products supplied to the military, while raising prices to U.S. military and to U.S. taxpayers."He echoed the sentiments conveyed by Pentagon spokesman Glenn Flood in announcing the approval of Northrop Grumman's bid. "A General Dynamics acquisition of Newport News … would constitute merger-to-monopoly in nuclear-shipbuilding construction," Mr. Flood told Bloomberg News. A Northrop Grumman acquisition of Newport News would mean the company would make nuclear submarines for the Navy as well as all of its aircraft carriers. General Dynamics will continue to build technology systems for aircraft and ships and supply defense systems.The Department of Justice still must approve the Northrop Grumman bid, a stock-and-cash bid that now is now worth more than three times General Dynamics' $2.5 billion all-cash offer.Northrop Grumman, a Los Angeles aerospace and defense contractor, employs 80,000 people and has operations in 44 states and 25 countries. It has announced a goal of $13 billion in revenue this year. Its Information Technology division is based in Herndon. General Dynamics bid for Newport News on April 25. Northrop Grumman responded with its own bid May 9. Newport News entered into discussions with Northrop Grumman, but company executives repeatedly said they preferred the General Dynamics bid, because General Dynamics had less debt and more experience in the shipbuilding field. Investor support for the Northrop Grumman stock-and-cash bid grew, however, as Northrop Grumman's stock price skyrocketed in the wake of the Sept. 11 attacks and related military action. Northrop Grumman's bid grew to be worth about $5 more per share than the General Dynamics bid.Defense analysts had said early indications were that the Pentagon would approve both bids and let the economy select a winner. Some said the General Dynamics would win approval because such a merger would save the Pentagon millions of dollars in administrative costs. Secretary of the Navy Gordon England was a former General Dynamics vice president. But the Pentagon said yesterday that both transactions would provide significant savings."During the initial stages of the bidding, [Newport News] was very comfortable with the relationship they had with General Dynamics. So it is a little bit of a surprise," said Stephen H. Baker, a retired navy rear admiral Adm. Baker said the antitrust arguments put forth by Northrop Grumman when it made its offer were clearly the deciding factor."Those arguments won over the naysayers," Adm. Baker said. "It probably was a close call."None of the three companies involved returned phone calls yesterday.Shares of Newport News fell 73 cents to $69.11 on the New York Stock Exchange yesterday. Northrop Grumman dropped $5.50 to $100 and General Dynamics fell $3.04 to $81.76. The Pentagon's announcement came after the markets closed.